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Extra info for A Century of Labor-Leisure Distortions
Center for the Study of American Business. Directory of Federal Regulatory Agencies. 3rd edition, 1981. DiNardo, John, Nicole M. Fortin, and Thomas Lemieux. ” Econometrica. 64(5), September 1996: 1001-44. Douglas, Paul Howard. The Theory of Wages. New York: Macmillan, 1934. Dunlop, John T. Wage Determination under Trade Unionism. New York: Macmillan, 1944. Century of Distortions - 51 Feldstein, Martin and Andrew Samwick. ” National Tax Journal. 45(1), March 1992: 1-22. Freeman, Richard B. and James L.
If we use the Stone-Geary utility function, which better fits the pre-1929 data, then the accounting is the same as in Table 2, except that ) ln c is replaced by ) ln (c-(). 338 for 1929-80 and 1929-96, respectively. Expenditure on nonsubsistence consumption also grows less than “expenditure” on leisure time, so tax rates implied by Stone-Geary utility also increase over time. 251, respectively. C. The Great Depression Implied tax rates rise dramatically in the early 1930's and persist for the decade.
31 Here we assume that the unemployed have the same disutility of work as those working, as compared to the assumption above (and in textbook labor supply models) that the unemployed have the same disutility of work as those out of the labor force. 32 The story is different 32 The unemployed rate affects the solid line in two ways. The first is its appearance in the denominator of the unexplained distortion formula above. The other is its effect on the MRS function when it is calculated using leisure hours that exclude the time of the unemployed, rather than including it as the previous calculations.
A Century of Labor-Leisure Distortions by University of Chicago